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Roth Conversion IRA

A Roth IRA conversion is a reportable movement of assets from a Traditional, SEP or SIMPLE IRA to a Roth IRA.   An IRA holder may convert his or her Traditional IRA to a Roth IRA if the eligibility requirements are met.

For conversions made before January 1, 2010, IRA holders may convert their Traditional or SIMPLE IRAs to Roth IRAs unless the IRA holder is a married individual and files a separate tax return, or the taxpayer’s modified adjusted gross income (MAGI) exceeds $100,000, during the year of the distribution from the Traditional, SEP or SIMPLE IRA.

The Tax Increase Prevention and Reconciliation Act of 2005, signed into law May 17, 2006, eliminates the $100,000 MAGI limitation for Roth IRA conversion eligibility beginning for conversions made on or after January 1, 2010.

When converting IRA assets to a Roth IRA, the IRA holder must pay tax on all pretax (deductible) assets.  Although the assets are taxed, they are not subject to the 10% early distribution penalty if properly converted into a Roth IRA. Roth IRA trustees, custodians or issuers must apply the withholding rules to conversions.

Please see a new accounts representative for further details.

Please consult your tax advisor for your tax implications.